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Physician Compensation Benchmarking for All Employed Physicians at an Urban Teaching Hospital
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Physician Compensation Benchmarking for All Employed Physicians at an Urban Teaching Hospital

Client/Profile

Urban tertiary-care teaching hospital affiliated with a major medical school

Challenge/Situation

To provide an independent review of compensation for the hospital’s 176 compensated physicians, against reliable and current market-based data. This hospital takes a very proactive position on legal compliance with federal regulations for physician compensation. Compensation levels of physicians exceeding the Hospital’s identified “safe harbor” threshold needed to be audited and solutions proposed to bring their compensation within a fair market value range.

Process

We assessed compensation using published data from five national surveys and Veralon’s private market datasets. Our projections indicated that all but nine physicians were receiving fair market compensation. These “outlier” physicians were interviewed to determine whether special factors justified their higher compensation. Where the compensation level could not be supported, recommended solutions including freezing compensation levels until market data supported their level and restructuring compensation into base compensation and incentive arrangements tied to measurable goals.

We recommended that the hospital establish time and effort reporting for all compensated physicians and begin developing base plus incentive compensation arrangements for the majority of employed physicians.

Results

As a result of this engagement, the client had a strong compensation framework to guide all future hiring, provide a basis for negotiations with physicians and control exposure to regulatory risk.